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Black Diamond, Inc. Message Board

edwardnessario1 33 posts  |  Last Activity: Dec 23, 2014 5:48 PM Member since: Dec 4, 2006
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  • Reply to

    Fire the CFO

    by californiaharry Nov 19, 2014 11:34 AM
    edwardnessario1 edwardnessario1 Dec 23, 2014 5:48 PM Flag

    I'm not sure why you believe you belong on this chat more than me Bonerbee. Rather than having your underpants wedge further into that narrow opening near your back pocket each time someone brings the truth why don't you please tell me what you believe this stock is worth, support that assertion with one (if we're lucky two) datapoints, and I'll spend a reasonable amount of time walking you through my logic with links, comps, references, numbers, etc. The entire board will benefit BUT...I need a baseline here from you. What's the business worth and why?

  • Reply to

    Fire the CFO

    by californiaharry Nov 19, 2014 11:34 AM
    edwardnessario1 edwardnessario1 Dec 22, 2014 11:06 PM Flag

    Young Grooving Bonerbee, I provided all the analysis and commentary you mentioned during our previous conversations. Back then I also said that if it's not a total house of cards, based on earnings, CRRS should be trading at no more than $1.15. You called me crazy, insulted me, and laughed [proverbially] because CRRS was trading at 3x that amount at the time. I saw CRRS hit $0.84 yesterday (so I win obviously).

    But my point is not to "win," Bonerbee...I could be condescending and compare mental sparring with you to sparring with my pre-adolescent children but that would only serve to RE-reinforce my point; that being right in an argument with a unsophisticated trader on a stock chat is as unimportant as being right in an argument with an angry five year old. Back to the middle and around again?

    Further, I don't know you personally and I get no pleasure as less careful investors lose money on these situations. It can be frustrating/aggravating to watch until I have to chime in (see my most recent post) but I never pretended that any of the information in that post was a "breakthrough." To slowly handhold you through what I thought should've been obvious, I said literally the exact opposite:

    "I would've thought that at some point SOMEONE on this message board would actually open a 10K or 10Q and actually LOOK at the numbers." This doesn't even approach innuendo...so are we clear big guy?

    Anyway, to your point about being a con-artist, read my post from the XWES chat at your convenience, where I expound on all of the positives of that company. XWES was just bought out for a significant premium to its recent levels AND that bullish, positive message from me in late March 2014.

    Net/net, I'd be mad if I were you too! This stock has lost you a TON of money...since we began discussing it, the market has gone up +20% and this stock has gone down -70%. That's 90 points of negative alpha.

    And, BTW, I'm not short CRRS...No Borrow ;P

    IMO

  • Reply to

    Fire the CFO

    by californiaharry Nov 19, 2014 11:34 AM
    edwardnessario1 edwardnessario1 Dec 22, 2014 7:03 AM Flag

    I would've thought that at some point SOMEONE on this message board would actually open a 10K or 10Q and actually LOOK at the numbers. This entire situation has nothing to do with the CFO...rather, CRRS' business model is severely flawed. It pays almost all revenue in the form of COGS, SG&A, and interest to its largest shareholder, TSE. What's more, CRRS' CEO works for TSE and the two cos are located in the same building. This is round-trip revenue to TSE and CRRS/Shareholders are left with an inflated "revenue" line and virtually nothing else of value. What do I mean? In the most recently reported quarter (Sep 2014), here are CRRS' economics:

    Revenue: $260m
    Cost of revenue paid to TSE: $227m
    SG&A paid to TSE: $13m
    Interest paid to TSE: $1m
    Total paid to TSE: $242m
    % of revenue paid to TSE: 93%

    AND, this is before CRRS pays its own execs and factoring interest totaling another $11m. So what's left for shareholders? Net income is $2m on revenue of $260m, or 0.7%. Annualize this $2m ($2 * 4 = $8) and at a $5 stock price as referenced by bigideaportugal, CRRS would be trading for 100x earnings. How do I get there?

    Shares: 162m
    Price: $5
    Market Cap = $810m
    Net income = $8m
    Price/Earnings = 100x

    As it is, CRRS trades for 18x earnings. Why should it trade for ANY more? If CRRS' margins compressed by just half a percent, over 70% of its net income would be wiped out. This is clearly a joke with so many red and yellow flags that only the very LEAST sophisticated market participants would be fooled by. IMHO

  • Sheesh...

    IMO

  • *John Messina, CEO of CRRS, also works for CRRS's largest vendor, TSE.
    *CRRS pays TSE 94% of total revenue
    *TSE forced CRRS to convert $14m of payables due to TSE into 30% of the company's stock last year
    *CRRS just acquired "Summit," supposedly a "cloud computing" company. Take the site tour - it's laughable
    *TSE bills CRRS $400m per year and their Client Login LInk doesn't even work. Visit the site!

    CRRS leases employees from TSE, reports gross revenue, and pays TSE nearly all of the money to handle all of the work. How could CRRS expand margins if they have no control over costs? Margins are decreasing as revenue grows!

    Why is CRRS reporting gross revenue? Even the SEC thinks their revenue is dramatically overstated. Visit the SEC Correspondence item #3 from February 2010

    CRRS has $66m in recourse debt from receivables factoring hidden from their balance sheet

    How can CRRS grow through acquisition trading at 40x EBITDA - what seller would take hyper-expensive shares in exchange for their legitimate company? CRRS has no cash and negligible cash flow.

    How can they continue grow organically once acquisitions anniversary? They have a commodity offering and margins so thin that they couldn't lower prices to grab market share.

    So, we have a business with little room for growth, inflated revenue numbers, negligible cash flow, and huge related-party red flags trading at a massive premium to other established competitors? (All IMO)

  • edwardnessario1 by edwardnessario1 Aug 20, 2014 9:03 AM Flag

    GSIT is losing business to ISSI, is much smaller than ISSI, and loses money - yet just got taken out at a 50% premium to ISSI.

    ISSI is a cash generating machine with long-term product supply agreements, tangible opportunities for growth, just instituted a dividend, and is repurchasing shares. If it were to garner a similar multiple to money losing GSIT (1.5x EV/S), ISSI would trade for $20. Given its strength and opportunities, it's arguable that it should garner a much higher multiple than GSIT.

    [ (1.5x sales * $325m sales + $135m cash)/31m shares=$20 ]

  • edwardnessario1 by edwardnessario1 Aug 12, 2014 2:20 PM Flag

    I wasn't going to post anymore on this name (and I haven't for a couple of quarters). As I see new "indy" investors added to the ranks of those that have lost money in this stock however, I feel compelled to politely point out the mechanical reason for why the stock is at $2 (and to reiterate: READ THE SEC FILINGS )

    In short, CRRS' new auditors weren't quite as loosey-goosey with the numbers as its previous auditors. CRRS 'factors' receivables meaning it uses its accounts receivable as collateral for debt that it can then use for working capital. CRRS' previous auditor allowed it to net the committed receivables against this debt and effectively cancel it out on the balance sheet (i.e. no mention of the debt). Thus, unless one read through the footnotes to the financial statements, he/she wouldn't know about this debt.

    CRRS' new auditor has forced it to put the debt back on its balance sheet. Thus, the enterprise value of the company increased by $73.5m overnight (or ~$0.50 per share). The stock was at $2.60 when the 10-K was filed in early July. Now the stock is at $2, so $0.60 per share. Couple that with the market being down a few percent, and you're at today's stock price. Nothing in the overall value of the company has changed, it's just that now more of its enterprise value has accrued to debt vs. equity. Said another way, the overall value of the company is still where it was six weeks ago even though the stock has fallen 20%.

  • Reply to

    In the intrest of full disclosure.

    by nonamesbutmine May 23, 2014 10:21 AM
    edwardnessario1 edwardnessario1 May 24, 2014 9:48 AM Flag

    They're only "insulated" insofar as franchisees continue to pay them royalties. A large group of franchisees is suing FRSH currently claiming it lied to them with regard to the economics of stores in FRSH's "growth" areas. Many of these stores generate half of the promised revenue and are compelled to spend twice the stated marketing dollars to do so. This is the growth story that fresh IPO'd on so it looks like there's some trouble brewing.

    Lee Partners potentially just wanted out and dumped shares on the market a few days before the franchisee meeting. A letter from 800 franchisees preceding the meeting showed that roughly 1/3 of stores are breakeven to losing money and franchisees want concessions before things turn ugly (i.e. less profitability for the parent).

    If FRSH's company-owned stores were burdened by franchise royalties, that entire segment would be generating a loss, and: 1) that's before interest burden (franchisees often debt-finance); 2) Company stores are higher than average on weekly sales.

    Net/net how well could franchisees be faring, especially in light of the fact that a FRSH store franchise/buildout cost 2x+ what a Noble Roman store costs?

    To top it off, FRSH is expecting 2% same-store-sales growth for 2014. That's not even a little exciting, but I guess the company is 33 years old.

    Link to source: http://www.forbes.com/sites/caroltice/2014/04/07/angry-papa-murphys-store-owners-sue-as-company-preps-ipo/

  • edwardnessario1 by edwardnessario1 May 7, 2014 4:29 PM Flag

    Who would own this stock? It's down 75% from the highs for a reason - $42 was silly, just as $12 is. This company will do maybe $40m of revenue this year. Even at $12 it's 20x SALES, not earnings. And at 42, it was trading for 70x SALES. Its market cap is still larger than its entire addressable market, and competitors are offering the same/similar service for free. Plus, its access to proprietary data could be switched off overnight. This company put "cloud" on its website the day before filing its S-1. It struck precisely when the iron was hottest on #$%$ cloud companies...beware this thing, in my opinion.

  • Reply to

    Financials Released....

    by muskiebear63 May 6, 2014 9:36 AM
    edwardnessario1 edwardnessario1 May 6, 2014 10:30 AM Flag

    Hi muskiebear...I'm sorry but the analysis you provided is simply incorrect.

    First, revenue wasn't "in the middle of estimate." Revenue of $12.7m was nearly $1m (8.5%) greater than the $11.8m estimate.

    In addition, adjusted EPS was $0.09 (not $0.05) vs. the $0.11 estimate. The change in tax rate explains nearly the entire difference between reported and expected EPS. Further, CLRO achieved this while spending significantly more to grow and diversify the business. This is extremely good management, in my opinion.

    CLRO already has over 50% share of their core market, and it's making tuck-in acquisitions in order to enter obvious adjacent markets (well known name, same customers, etc.) Meanwhile CLRO has 60% of its market value in net working capital + marketable securities.

    Profitable company, rock-solid balance sheet backstop, significant "low-hanging" opportunities for growth (with nothing to lose), execution on strategies, roughly in-line quarter even including investments...how much more can one ask from a small, growing company?

  • edwardnessario1 by edwardnessario1 May 5, 2014 12:52 PM Flag

    Amira recently issued two press releases, both of which seem like an effort to prop the stock up in the absence of successfully delivering on promises.

    #1 Amira Nature Foods Ltd Announces Contract with Buhler India Private LImited for New Rice Processing Facility.

    ANFI was likely hoping this would whet the proverbial Wall Street Chops that have been waiting for years for it to secure financing to build a new rice processing facility and be able to grow profitably. This release simply says that ANFI promised to pay Buhler money, not that it has money to give them, or a path to financing a complete facility build-out which is years in the making. How is it possible that ANFI hasn't secured financing? The number of junk offerings has skyrocketed...how can it take ANFI two years to get a note?

    #2 Company Opens 8 Distribution Centers in Fiscal 2014 to Capitalize on Growing Consumer Demand

    Why put this press release out this morning? It is a recap of the fiscal year, not breaking news worthy of a press release. ANFI opened 8 stores where you can buy rice in India. How much revenue can a store generate? The Company generates $500m of sales per annum. To move the needle 5%, that's $25m. Are these stores going to each generate $3m from selling bags of rice?!?!? How many stores would you guess sell bags of rice in India? How will Amira make a sustained economic profit from selling rice? Why does a similar competitor (although one that processes their own rice), Khushi Ram Behari Lal, trade at 6.1x earnings on the Natl India exchange, yet ANFI (using third-party competitors to process a lot of their product) trades at 16x in the US?

    IMO

  • edwardnessario1 by edwardnessario1 Apr 28, 2014 2:36 PM Flag

    After operating with a well-known conflict of interest for years, ANFI announced they parted ways with Grant Thonton India because members of their board are partners. So, what does this mean for ANFI investors?

    Well, I'd make a gentleman's bet that ANFI will announce its inability to file its annual report by the 20-F deadline (in ANFI's case 4/30/14 or two days from now). Along with the notice, it will cite a lack of audited annual financials as the only hurdle standing in the way of refinancing their exorbitantly expensive debt, marking nearly two years of promises (most recent promise was to refinance by mid-April).

  • edwardnessario1 by edwardnessario1 Apr 23, 2014 5:00 PM Flag

    ...can this charade continue? The ANFI story is predicated on being able to refinance a ton of high interest India-based debt with an offshore, low-interest facility that will not only save them $millions on interest payments, but also allow ANFI to build a new processing facility. Let's track the progress of the refi:

    11/20/12 “We are in process of discussions with banks…[and will] hopefully announce some good news in the near future."

    2/25/13 “We have received term sheets from several investment banks”

    6/10/13 “We had soft conversations with a number of banks and they were all positive. Everyone is waiting for year-end audited numbers. Now the numbers are public so we’re working aggressively.”

    8/26/13 “By the end of the year we should have something concrete”

    11/11/13 “You should hear something from us in the next eight to twelve weeks”

    2/25/14 “We are targeting by middle of April, if not end of March”

    How long can this continue? They've already missed their most recent target for the 6th time. ANFI's #2 guy left with barely a mention several weeks ago? Something's clearly "up" here.

    IMO

  • Reply to

    Secondary at 4.10

    by seth1611 Apr 15, 2014 6:25 PM
    edwardnessario1 edwardnessario1 Apr 18, 2014 8:24 PM Flag

    You mean the move subsequent to the move once they announce AT&T as a customer in the next 1-3 weeks?

  • edwardnessario1 by edwardnessario1 Mar 28, 2014 3:36 PM Flag

    XWES operates in an industry that is massive and fragmented. The company could increase in size by 20x and still be a drop in the bucket. And all they have to do is higher more salesmen, which is getting easier given that energy prices are rising and undifferentiated salesmen can no longer offer cost savings. XWES' platform is differentiated.

    The Company is nearly through the painful impact of the shift to ratable revenue and earnings are going to start pacing (then outpacing) the strong cash flows.

    It's cash backlog represents three-quarters of its market value and much of the expense associated with delivering that backlog has already been recognized.

    It's refinanced its balance sheet, and after earnouts and principal pay-downs mid-year, it'll be in a position to make accretive acquisitions.

    There is an activist investor involved that is recommending tangible, sensible changes to realize value, including a sale of the business.

    XWES is going to report its seasonally strongest quarter (4Q) on Monday and there's been a strong bid into the print.

    Net/net, as a long investor, I'm looking forward to Monday.

  • Reply to

    ODDS of being bought out by AMZN

    by fedrally001 Feb 14, 2014 9:19 PM
    edwardnessario1 edwardnessario1 Feb 16, 2014 4:07 PM Flag

    What??? Amazon IS in the textbook rental business - they're the reason that CHGG faced pricing pressure last year, before the recent round of price declines and well before the coming round of price declines. So, odds are likely ~0% that AMZN acquires CHGG. LNKD? WOW...smart money clearly is not in CHGG...

  • Reply to

    Chegg is the next NFLX

    by fedrally001 Feb 13, 2014 7:14 PM
    edwardnessario1 edwardnessario1 Feb 14, 2014 9:30 AM Flag

    It's not that there's no value in their services, it's just that the value probably isn't in the ballpark of $600m.

    Their services segment generated $16.7m in the quarter, an annualized $67m. So you're willing to pay 9x sales for this business, or more given that their core business loses money and so likely should be attributed a negative value?

    I can direct you to a handful of call center companies that trade for ~5-7x Ebitda - apply that 9x sales multiple to them and you're looking at 20x your money! But you wouldn't do that, because it's just a call center business, worth mid-single-digit multiple of Ebitda.

  • Reply to

    Chegg is the next NFLX

    by fedrally001 Feb 13, 2014 7:14 PM
    edwardnessario1 edwardnessario1 Feb 13, 2014 10:58 PM Flag

    I don't think the 70% growth pertains to digital text books...it relates to a bunch of other "services" like homework help, some pre-college community, and an internship site. Digital books is probably

  • Reply to

    Chegg is the next NFLX

    by fedrally001 Feb 13, 2014 7:14 PM
    edwardnessario1 edwardnessario1 Feb 13, 2014 10:55 PM Flag

    The prospect of CHGG generating significant income from digital textbooks seems a bit suspect.

    Why would a publisher sell a digital copy of their textbook to CHGG and then let CHGG "rent" it out to a student?

    And then, how does CHGG recoup anything in a salvage sale?

    A digital textbook doesn't need a middleman with its hand in the margin jar.

    The publisher can just have it available for download for the student.

    Digital rental model makes no sense.

  • edwardnessario1 by edwardnessario1 Feb 13, 2014 5:43 PM Flag

    I'd bet $1 that these guys announce AT&T by Easter...

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